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Compute the amount of the loss as a result of the fire

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Reference no: EM132590946

Question - Gross Profit-Method

Wallace Company lost most of its inventory in a fire in December just-before the year-end physical inventory was taken. The corporation's books disclosed the following.

Beginning inventory $170,000

Sales revenue $650,000

Purchases for the year 390,000

Sales returns 24,000

Purchase returns 30,000

Rate of gross profit on net sales 40%

Merchandise with a selling price of $21,000 remained undamaged after the fire. Damaged merchandise with an original selling price of $15,000 had a net realizable value of $5,300.

Instructions - Compute the amount of the loss as a result of the fire, assuming that the corporation had no insurance coverage.

Reference no: EM132590946

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